7/10/2018: Taking Full Advantage of the 2017 Tax Cuts and Jobs ActJuly 11, 2018
Taking Full Advantage of the 2017 Tax Cuts and Jobs Act
Key Points to Discuss With Your
Like all things, tax laws are constantly
changing. An important part of serving
your clients is responding quickly and
strategically to new developments in the
tax law landscape. But at the same time,
a knee-jerk reaction is rarely the best
course of action—often resulting in
unforeseen complications in the future.
The best decisions are made by
professional teams working together to
analyze all angles of a situation to come
up with the best strategy in response to
the Tax Cuts and Jobs Act (TCJA), a
historic amendment to the Internal Revenue Code of 1986.
The TCJA affects many Americans in a variety of areas of life, and your clients might not
be aware of what its impact will be on their long-term financial plan. Of course, this law
is going on seven months old, but too many people struggle with taking action in their
financial and tax planning lives, so the historic nature of these changes cannot be
The law’s benefits will accrue most for those who take a proactive approach — rather
than those who wait until the last minute. Here are several reasons it needs to be top-ofmind
for both you and your clients:
· The increase in the standard deduction and the general lowering of individual tax
rates means that your clients have likely been enjoying more take-home pay.
· The elimination of the personal exemption means that depending on your client’s
marital status and number of dependents, they may not be able to lower their
taxable income as much as they had in the past. Some clients may face a higher
tax burden, as a result, even after taking into account the lowered rates.
Condie & Adams, PLLC
611 4th Avenue, Suite A
Kirkland WA 98033
Condie & Adams, PLLC is a
values-driven law firm
committed to providing
individuals, families and
small businesses with personalized, clientcentered
legal services in estate planning,
probate and trust administration, tax
planning, and related legal matters.
· The limitations on deductions for state and local income taxes (SALT) means that
for those clients in states or communities with high income taxes, their taxable
income may not be reduced as much as it had been in the past because they cannot
get credit for all the other forms of income tax they have paid. However, if any of
your clients are concerned about this, we may have some strategies (such as
Incomplete Non-Grantor Trusts) to help alleviate the new tax burden.
· The reduction of the alternative minimum tax for individuals means that fewer
individuals must deal with this burdensome and often-complicated tax.
· With the increase in the unified credit to $10,000,000, adjusted for inflation, there
has been a reduction in the overall number of estates affected by the estate tax. If
your clients had previous planning centered around saving estate tax, those plans
need to be re-evaluated to make sure that they are still working towards the
client’s long term objectives now that estate tax may not be a concern. Your
clients may also want to take advantage of the increase by making lifetime gifts,
particularly if they had previously used up their exemption in previous years.
· With the effective repeal of the individual mandate of the Affordable Care Act
effective in 2019, your clients will now have the choice of whether or not to carry
health insurance coverage without suffering the penalty of a fine. However, with
no requirement for coverage, it is speculated that the cost of insurance in the
marketplace could increase without the additional participants. Clients should
carefully balance the costs of paying for their own healthcare against the cost of
maintaining insurance, even after the mandate is gone.
The new tax developments are especially pertinent to your business-owning clients. With
the possible 20% income tax deduction for pass-through entities, they’ll want to review
entity selection for their business operations as soon as possible. Now is also the time to
consider gifting of interests to reduce the limitations inherent in the qualifying business
income calculation and to utilize the increased gift tax exemption.
For clients with “specified service businesses,” such as attorneys, doctors, dentists, and
consultants, it makes sense to consider separating any “non-service” businesses out of
their service business, such as real estate or clerical activity. Utilizing multiple trusts may
also help to facilitate business-owner clients achieve a larger QBI (qualifying business
Planning Goes Beyond Taxes Too
The implications of the TCJA go much further than taxes alone. Your clients will always
need extensive guidance around asset protection, privacy, retaining control, avoiding
issues like guardianship and probate, and ensuring that their loved ones are cared for for
years to come. These aspects of financial and estate planning are constant regardless of
fluctuations of tax reform. Clients who haven’t considered these issues should discuss
them with an estate planning attorney as soon as possible.
These are sophisticated, complex, and multi-faceted planning strategies. For the right
client, they can save tens of thousands of income tax. But they can cost dearly if
implemented incorrectly. For this reason, collaboration with us and the rest of your
clients’ financial team is increasingly indispensable for success. Help your clients plan
for whatever comes next with the guidance of a well-rounded advisory team.
This newsletter is for informational purposes only and is not intended to be construed as written advice about a
Federal tax matter. Readers should consult with their own professional advisors to evaluate or pursue tax,
accounting, financial, or legal planning strategies.
You have received this newsletter because I believe you will find its content valuable. Please feel free to Contact Me if you have any questions
about this or any matters relating to estate planning.
Unsubscribe from this newsletter
Condie & Adams, PLLC 611 4th Avenue, Suite A Kirkland WA 98033This entry was posted in archive-wealthcounselor. Bookmark the permalink. ← 6/12/2018: Keeping the Peace After You Are Gone 7/10/2018: Have You Taken Advantage of the Tax Cuts and Jobs Act Planning Window? →